Tesco continues convenience push

Tesco​ is to buy Adminstore, a small privately owned company operating 45 convenience shops trading mainly as Europa, Harts and Cullens, a move which will strengthen Tesco's fast-growing presence in the British convenience store sector.

In late 2002, Tesco bought the T&S chain, adding more than 800 outlets to its burgeoning Tesco Express convenience store unit, a move which set off alarm bells in some sectors amid fears that many stores would close down, or that suppliers margins would be squeezed.

But the Competition Commission found no reason to block the T&S deal, and Tesco moved rapidly in to the convenience store sector as a result, beginning the conversion of T&S outlets to the Express fascia.

The Adminstore deal is of course much smaller, with all the outlets acquired located in central London, but these too will be converted to the Tesco Express fascia. Tesco said that as a result, customers would benefit from lower prices and improved choice, range and service.

Jitu Patel, Adminstore's managing director, said that the sale to Tesco was good news. "We have built a successful business and our stores are well located for delivering convenience to customers. Tesco's knowledge and skills will take our stores to even greater heights in the years to come."​

Adminstore's sales in the year to September 2002 - the latest figures available - were £72.8 million, while pre-tax profits reached £2.1 million. T&S sales are around £933 million, while Tesco does not give separate sales figures for the Express stores.

Tesco's further move into the convenience store sector will do little to dampen down concerns about its increasing dominance in the UK retail market sector, but since the chain has only 5 per cent or so of the convenience store market, there is little that the regulators can do to block its moves.

With all other means of growth in the UK effectively blocked - the odd new store is still allowed, while Tesco may also snap up a couple of former Safeway outlets being sold by Morrisons - Tesco is keen to exploit the fragmented convenience store market there, and has a major head start over all its larger rivals.

But while we are likely to see more convenience store acquisitions in the UK by the market leader - and could this even include larger chains such as Somerfield or Iceland? - most of Tesco's growth in the coming years is likely to be outside the UK, with plenty of opportunities in central and eastern Europe as the EU expands, and the tough nut of the US still to crack.